Palestinian Terrorist Groups Regain Their Cash Flow from… Finance Minister Salam Fayed

Washington’s latest stance on Hamas found expression at a news conference called by UN secretary general Kofi Annan at UN headquarters on Tuesday, Sept 20, at the end of the Middle East Quartet’s session (attended by Anan and the foreign ministers of the US, Britain, France, Russia and Germany.)

US secretary of state Condoleezza Rice made this apparently abstruse yet revealing statement:

“…we have noted that, ultimately, it is the case that there is a fundamental contradiction between armed activities and the political process. Armed activities are outside the monopoly of the State on violence and the political process. And so that is a matter of principle, ultimately. We understand that this is a transition, and I think everybody understands this transitional process. This is going to be a Palestinian process, and I think we have to give the Palestinians some room for the evolution of their political process.”

She was followed by the UK foreign secretary Jack Straw:

“I am asked whether money put in by the European Union and other donors might end up as failed projects which might go to waste. I say this: In recent years, not least thanks to the work of Salam Fayed, the finance minister of the Palestinian Authority, there have been higher and higher levels of accountability for the spending which has been financed by external donors, including the European Union. For the European Union’s part, there has been intensive scrutiny, too, to ensure that the money is spent for the purpose intended, but Commissioner Patten and Commissioner Ferrero-Waldner, his successor, are very tough in ensuring that the money that is allocated is spent properly.”

DEBKA-Net-Weekly‘s political sources note: Salam Fayed is an American citizen of Palestinian descent. He was on the staff of the World Bank in Washington in mid-2000 when the Bush administration sent him to Ramallah. The Palestinian war against Israel was at its fiercest, and Fayed was required to take the Palestinian Authority’s exchequer out the hands of Yasser Arafat and build a transparent, modern system of financial management.

Proper, transparent financial management goes by the board

His main mission was to halt the systematic diversion of European and Arab donations for economic reconstruction to the funding of terrorist attacks.

Arafat’s method of handling money was simply to keep handy large sums of cash and hand out wads to terrorist groups without bothering to record the amounts or its recipients. It was Fayed’s job to put a stop to these handouts.

His three years as finance minister have not been an unqualified success. Arafat consistently refused to account for the moneys he disbursed to the American-Palestinian appointee foisted on him, and denied him access to the major part of Palestinian finances and investments around the world.

After Arafat’s death in November 2004, Fayed was able to put a stop to the ungoverned cash outflow, but failed to overcome the corruption that had spread through the entire Palestinian financial system. The goal of transparency eluded him when it came to chasing down the wayward routes of incoming donations, including the funds allocated the Mahmound Abbas (Abu Mazen) government by the US government.

Of late, DEBKA-Net-Weekly‘s counter-terror sources report an alarming discovery by the Israeli intelligence agencies keeping track of the funding sources of the various terrorist groups. What they found was that the Hamas, Jihad Islami, Fatah-al Aqsa Brigades and the radical Palestinian Fronts, had a new source of cash: it was coming from finance minister Salem Fayed in person.

And, worse, like Arafat, he is making them cash payments outside the regular Palestinian budget.

Israeli intelligence chiefs brought their discovery to the attention of prime minister Ariel Sharon and defense minister Shaul Mofaz, only to be assured that the cash was not being spent on terrorist operations, but was a form of hush money to keep the radical organizations from breaking the informal truce they accepted earlier this year.

Counter-terror experts have serious reservations about this turn of events.

Donors’ money spent on usurping Abu Mazen

1. It is the first time that a legitimate authority has laid out cold cash to purchase a respite in suicide attacks from terrorist organizations. What happens when the money runs out? And what if the armed organizations – or factions thereof – decide to cheat their paymasters and restart their campaigns of terror?

2. The payola comes out of authorized funds allocated by the United States and European governments. Are they aware of the use to which their donations are being put? Jack Straw’s words about being “very tough in ensuring that the money that is allocated is spent properly,” gave no sign he knew about its true destination.

3. Aside from the worrying fact that Fayed, late of the World Bank, has reverted to the late Arafat’s method of disbursing cash to terrorists, no one conversant with this week’s events in the Gaza Strip (See HOT POINTS below) believes for a moment that the money is being “spent properly.”

It is being spent in broad daylight to usurp the Palestinian Authority and Abu Mazen as the proper powers-that-be in the territory evacuated by Israel and to install the most violent Palestinian groups as masters of the new domain.

Some people ask if this represents “the evolution of their political process” hoped for in Washington. Not according to the testimony Shin Beit director Yuval Diskin offered Wednesday, Sept 21, to the Knesset foreign affairs and security committee. In his view, the Palestinian Authority’s chairman has lost the battle for control of Gaza. Indeed, Abu Mazen’s government in both Gaza and the West Bank is disintegrating.